The Sygnum Bank report states how payment processing giants like Visa have been integrating Solana for USD Coin (USDC) settlement citing its “low costs” and “high throughput”.
Swiss crypto bank Sygnum recently stated that Layer-1 blockchain Solana SOL $147.6 24h volatility: 0.9% Market cap: $76.45 B Vol. 24h: $2.88 B could pose a “serious challenge” to Ethereum with financial institutions preferring the SOL network for rolling out real-world asset tokenization platforms along with stablecoins.
There have been indicators recently that even conservative institutions have been choosing Solana over Ethereum due to its scalability, stability, and security advantages. In its report on October 1, the Swiss crypto bank wrote:
“A PayPal executive recently claimed at a Solana event that ‘Ethereum is not the best solution for payments.’”
Additionally, the Sygnum Bank noted how payment processing giants like Visa have been integrating Solana for USD Coin USDC $1.00 24h volatility: 0.0% Market cap: $61.94 B Vol. 24h: $5.93 B settlement citing its “low costs” and “high throughput”. On the other hand, trillion-dollar asset manager Franklin Templeton has recently declared to launch its mutual fund on the Solana blockchain. Furthermore, banking giant Citi Bank is also considering using the Solana network for faster cross-border settlements.
But it’s going to be a long journey for Solana to overtake Ethereum as it is still one-fourth in size in comparison to the latter. The Sygnum Bank also pointed out that a few of Solana’s metrics look overstated. For example, a large part of the blockchain’s revenue depends only on the memecoin activity, which can be very much seasonal.
Whistleblower Edward Snowden has also criticized Solana for being too centralized in nature. On the other hand, the Ethereum blockchain has recently received the backing of BlackRock CEO Larry Fink.
Currently, Ethereum maintains a commanding presence in the tokenization of real-world assets and stablecoin markets, holding 81% and 49% market share, respectively, according to on-chain data. In contrast, Solana captures less than 3% in both sectors.
Solana vs Ethereum
In its report, Sygnum Bank noted that the SOL/ETH price is up 300% year-to-date and it was up by 600% last year in 2024. However, it believes that after two long years of underperformance, ETH ETH $1 810 24h volatility: 1.2% Market cap: $218.72 B Vol. 24h: $11.61 B could be seeing a sharp reversal.
Despite the complexity of Ethereum’s technical roadmap, Sygnum argues that Ether is more appealing to traditional investors than Bitcoin BTC $95 116 24h volatility: 0.0% Market cap: $1.89 T Vol. 24h: $23.00 B , as it is easier to evaluate and assess. It noted:
“Ether derives most of its value from economic activity on the network and from the resulting revenues. [It] is more akin to an equity investment where growth, profits and cash flows are evaluated – this is more relatable for traditional investors than the digital gold concept.”
Sygnum highlighted that the risk of the US securities regulator classifying Ether as security decreased significantly after the Ethereum investigation concluded on June 19. In contrast, many crypto industry leaders believe the US regulator continues to view Solana as a security.
“Ultimately, for Solana to successfully challenge Ethereum in the long run, it needs to shape future technological cycles and become the birthplace of groundbreaking decentralized applications that capture the market’s imagination and drive widespread adoption,” the bank wrote in its concluding note.
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